Does it matter if defence spending falls below two percent of GDP?

Much is being made at the moment of NATO’s “2-20” goal: that members ought to spend at least 2% of their GDP on defence, with about 20% of that figure going on equipment – the argument being that if NATO underspends on defence then a) the deterrent effect is undermined, and b) NATO countries will find themselves outgunned if it does actually come to war.

I say ‘at the moment’ but the issue was raised last year at the NATO summit in Newport, Wales. Barack Obama and David Cameron, in a joint article in The Times, criticised members who were not meeting the 2% target and thus not carrying their weight – their weight defined not in absolute terms but in terms relative to their national wealth, which seems a fair way of going about things.

Michael Fallon, Secretary of State for Defence, made a similar point: ‘US taxpayers won’t go on picking up the cheque if we choose to prioritise social welfare spending when the threats are on our doorstep.’

But this has been the case for decades, has it not? It’s not something EU members like to admit; they prefer the conceit that the cause of post-WW2 peace is largely down to the existence of the EU and its former institutions rather than other factors: War weariness; German pacifism; nuclear deterrence; NATO-Warsaw Pact balance; and above all US military and diplomatic power.

Only the USA (4.4%), UK (2.4%), Greece (2.3%) and Estonia (2%) met the target that year – the USA understandably well ahead of the others. We know why Britain is one of the four, but the inclusion of the last two is interesting for different reasons: Greece is skint and so one might excuse them for not hitting the target unlike, say, Germany (1.3%), which is loaded; and Estonia shares a border with Russia and has living within its borders a 25% Russian population and so perhaps might feel a vested interest in spending more on defence.

All other member states fell someway short, Iceland managing a seemingly unfeasible figure of 0% of GDP. But maybe this is a rounding error; it’s difficult to believe they don’t have at least one coastal patrol vessel. Though whatever the particulars of this example, it seems that the majority of NATO countries are not pulling their weight.

So it would be embarrassing, would it not, if the UK fell below the spending target of 2% of GDP. It certainly would, especially after all that finger pointing. Yet this is what is being reported: that George Osborne has told the Prime Minister that on current projections spending will dip below the threshold sometime by 2017.

Personally, I’m not a fan of arbitrary spending targets: if a department is instructed to spend a certain amount of money simply in order to hit a target, the chances are that a good proportion of that money will end up being spent on things we neither need nor want.

‘Don’t worry, Minister, we’ve hit the target,’ is not a comment I want to hear coming out of any senior civil servant’s mouth. Unless, that is, he’s reporting on some sort of recent military engagement. In that case, hitting the target is entirely appropriate.

But if ministers make a big thing about a target, then they really ought to meet it – otherwise they’d be better off not having it; hostage to fortune etc. We can see how the arbitrary 0.7% target for overseas aid has become a political football. If you question it, you are guilty of wilfully killing babies; and if you are for it, you are guilty of high-handedly redistributing money from the poor in Britain to the rich and corrupt in various foreign countries.

The arbitrary target, therefore, can skew the business of government – despite best efforts, I’m sure. For the example of overseas aid, political action becomes less about the rightness and practicality of a particular scheme to help less fortunate countries, and more about the political imperative to meet the target come what may. Success should be defined by its outcomes on the ground, not by reaching the arbitrary target.

How useful are these goals anyway? Why spend 2% of GDP on defence? Why not 1% – or indeed 4% like the USA?

Perhaps the numbers themselves are irrelevant. Military people talk about defence capabilities – naval fleets, air force squadrons, army battalions and formations. What will be – and should be – exercising the minds of defence strategists is not so much the target, but the outcome of the spending each NATO member allocates to defence and how each component part might be brought together as a whole.

NATO itself has recognised that fiscal constraints perhaps necessitate a new approach – or at least a modified one. Smart Defence, for example, encourages member states to cooperate: not just in the development and acquisition of capability, but also in its operation – in cyber defence, missile defence and joint intelligence for example.

But whatever this capability looks like and however it is distributed between member states – it costs money. In these cash-strapped times (last year’s UK budget deficit was £100 billion) it is understandable that governments will be tempted to let defence spending slide: especially because politicos tend to see few votes in defence.

Even so – resurgent tensions with Russia and surging instability in various Islamic countries suggest that defence, though perhaps an unpopular way to spend money, remains essential. Or not, as our politicians will decide?